Viacom Profit Up 15%
NEW YORK — G.I. Joe and the Transformers came to Viacom Inc.'s rescue in the third quarter, helping boost the company's earnings 15 percent with strong box office returns.
Viacom, the media conglomerate controlled by billionaire Sumner Redstone, owns a wide range of media properties including the MTV and BET cable networks and the "Rock Band" video-game franchise.
The industrywide advertising slump and shifting consumer habits have hurt the company as it takes in less money from selling commercial time and DVDs.
But Viacom's film studio, Paramount Pictures, has been slashing costs and focusing on a smaller slate of films. It also saw strong ticket sales for "Transformers: Revenge of the Fallen" and "G.I. Joe: The Rise of Cobra."
That helped Viacom's filmed entertainment segment earn $69 million during the third quarter, compared with a loss of $19 million in the year-ago quarter.
The horror film "Paranormal Activity" also provided a surprise boost to earnings, an unexpected box office success despite a small budget and relatively little marketing. "Every once in a while you get a miracle," CEO Philippe Dauman said.
The film segment's overall revenue fell 6 percent, pulled down by weak DVD sales.
Revenue was flat in the segment that includes Viacom's cable networks and video games. DVD sales related to the cable networks hurt the segment as well, even as Viacom's much-awaited "The Beatles: Rock Band" got a strong start. It appeared among the top 10 best-selling games in September, according to market research firm NPD Group.
Overall, Viacom said it earned $463 million, or 76 cents per share, in the three months ended Sept. 30, up from $401 million, or 65 cents per share, a year ago.
Excluding a one-time gain from a favorable tax adjustment and a charge for paying down debt, earnings came to 69 cents a share. That beat estimates of 57 cents among analysts polled by Thomson Reuters.
Revenue slipped 3 percent to $3.3 billion, in line with estimates.
Viacom, which draws nearly a third of its revenue from advertising, offered a guarded outlook for the rest of the year, waiting to see how the crucial holiday season plays out.
During the annual "upfronts," in which advertisers bid on commercial time ahead of the fall television season, Viacom and other TV studios held on to a bigger chunk of inventory. They hoped that by waiting for an improving economy later in the year, they could sell ad slots closer to air time for more money.
Dauman said the strategy has paid off in part, with advertisers during some recent weeks paying 10 percent or more above ad rates earlier in the year.
But he said ad prices remain volatile and uncertainty remains about whether advertisers will buy up all of the extra time, making predictions for the rest of 2009 difficult.
"The tone is feeling better," Dauman said. "But we have to be cautious. We're just at the early stage of a recovery."
Viacom shares fell 2 cents to $28.03 in midday trading Tuesday.
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ANDREW VANACORE | 11/ 3/09 11:34 AM |